Verify an EIN to prevent potential issues with tax returns by either asking the party for verification or looking to larger databases.
An Employer Identification Number refers to specific tax identification numbers issued by the IRS to business entities. An organization must maintain accurate EIN information on partner businesses that are paid more than $600 in a calendar year. An erroneous or invalid EIN can lead to conflicts on tax returns. Conflicts can result in a potential rejection or an audit of the tax return. Verifying the EIN requires asking the right questions and using the right resources available to business owners.
Ask the Business
Most companies obtain IRS Form I-9 from a business vendor or independent contractor at the start of the working relationship. The I-9 states the company's name, address and EIN information, which are all provided by the payee. Erroneous EIN numbers result from one of two things: accidental number transposition or intentional entry of fraudulent information.
Regardless of the reason, confirmation of an EIN is necessary. To verify the information, request a copy of the EIN letter from the I-9 provider directly. To obtain an EIN, a company files IRS Form SS-4 and then receives an EIN validation letter. The company is not required to provide this document, but those that legitimately want to conduct business shouldn't deny the request.
Internal Revenue Service
The IRS maintains information on tax identification numbers. However, you won't be able to get private information on another business except under specific circumstances. Employers are able to verify employee tax identification information, namely Social Security numbers, through the Social Security Number Verification System.
There are two methods to verify business information. The first is the Online Taxpayer Identification Number Matching Program. This database matches given name and TIN information to verify that the two components belong together. The system is designed to match information on parties that are subject to backup withholding, which means not every business is in the system.
The second method applies when you're looking up nonprofit organizations. EIN information for tax exempt businesses is maintained via the IRS Exempt Organization Select Check database. This database not only verifies whether the EIN matches the named non profit entity, it notes whether the entity has had its non profit status revoked.
Tax Preparation Programs
Large tax software companies have compiled database information over the years. As businesses or consumers enter respective W-2 information with company names and EINs, the program software records the data into larger databases. As a result, it is possible that when your tax preparer enters the company name or EIN while completing a tax return, additional company information will be provided.
Programs like TaxAct, H&R Block and Turbo Tax have such databases. Don't expect these to be complete databases or to be 100 percent correct since some of the information is based on user-entered data, which may have errors.
Check Online Databases
Another way to check whether or not an EIN is valid is to use online databases. FEIN Search, EIN Finder and Real Search are all good resources. These services change monthly or annual fees. Eventually, you can start with Melissa, a free database covering all addresses recognized by the U.S. Postal Service. Users can look up any company in the United States, including its number of employees and sales reports.
To verify a charity's EIN, use GuideStar. This online platform offers data on more than 1.8 million tax exempt organizations across all sectors. It's free to use and provides an accurate overview of the company you're interested in.
Other options include large databases like Dun & Bradstreet and Experian. These services, though, provide a lot more than just a company’s EIN. They offer a complete financial overview and insider information. Therefore, they are more expensive compared to FEIN Search and other EIN databases.
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